Datacenter firm Equinix looks to grow through new acquisitions

US interconnection and datacenter company Equinix, which offers interconnection services – private exchange of data between companies through datacenters – is bullish on growing through acquisitions.

Although inorganic expansion is part of Equinix's DNA, Eduardo Carvalho (pictured), president of Equinix Brasil, said the company is eyeing new acquisitions this year, though none in Brazil.

Last year, Equinix acquired 29 datacenters from Verizon Communications in 15 cities in North and Latin America.

Brazil is Latin America's largest datacenter market and the biggest for the group.

"One of our greatest goals is to evangelize the part of the Brazilian market which still doesn't see that cross-connection as an advantage," Carvalho told Brazilian journalists during a press lunch in São Paulo.

Carvalho used to run Alog Data Centers, a Brazilian company Equinix acquired in July 2014, and was appointed as Equinix Brasil president following the conclusion of the deal.

Equinix previously held 53% of a majority stake in Alog following a deal with private equity firm Riverwood Capital in 2011. Equinix then purchased the remaining 47% for US$225mn, as stipulated in the Riverwood agreement.

The company has six datacenters in Brazil, having recently concluded the latest expansion phase in its SP3 facility in Santana do Parnaíba, São Paulo state. In Latin America, the group has another two datacenters in Colombia.

Worldwide, Equinix is about to reach the threshold of 200 sites this quarter, according to Carvalho.

Without disclosing figures, he said that Equinix plans to maintain in 2018 investment levels similar to 2017. He also said he could not disclose revenues or sales forecasts, but stressed expectations are high with the digital transformation pushing corporate demand for connectivity.

Equinix claims to have 1,500 clients in Brazil and 9,500 worldwide.

MONET CABLE

This week, Angolan telecom group Angola Cables announced it selected Equinix to host a landing point connection for the Monet submarine cable linking Brazil to the United States.

Monet's fiber arrives in Fortaleza, capital of northeastern Ceará state, and goes undersea down to Praia Grande, on the coast of São Paulo state. From Praia Grande, the fiber goes to Santana do Parnaíba, in capital São Paulo's metropolitan region, from where traffic will be distributed throughout South America.

Monet is a project of a consortium and has the Angolan company as one of its investors. Other companies and investors are Google, Uruguay's state-run telco Antel and Brazil's private carrier Algar Telecom.

The cable runs over 10,000km and has capacity of at least 60Tbps in six pairs of fiber optics – two of which are owned by Angola Cables. Construction, financed by the four companies forming the consortium, was carried out by TE Subcom.

Monet will be connected to Equinix Brazil's IBX + SP3 datacenters, and the IBXs + MI1 and MI3 datacenters at Equinix USA.

BRAZIL FOOTPRINT

Echoing a previous interview with BNamericas, Carvalho said that the company is mulling expanding out of the São Paulo-Rio de Janeiro business axis, which still concentrates the main points of data traffic in Brazil.

Most of this expansion across Brazil is expected to come indirectly, via resellers and partners, whereas sales in the São Paulo-Rio region tend to be direct.

TAX BREAKS

Equinix has been following the discussions of a project championed by the science, tech and innovation ministry (MCTIC) that aims to expand the number of datacenters.

The proposed plan is to slash federal taxes on the purchase of equipment, construction material and telecoms and electric power services, give priority customs treatment on imports of datacenter goods and easing requirements for the certification and homologation of equipment by telecom regulator Anatel.

"The idea is a good one. There are some obstacles in Brazil regarding electricity costs for the datacenters sector," said Carvalho.

Nevertheless, Wellington Lordello, marketing and business development manager at Equinix Brasil, says MCTIC focuses too much on hurdles related to the construction of sites rather than the operations and services.

Another bill, currently in the lower house, aims to include datacenter operations as beneficiaries of a special tax regime.This regime benefits companies that export software and IT services by waiving certain taxes normally applied to the cost of equipment and raw materials.

LATIN AMERICAN INTERCONNECTION

According to Equinix's latest Global Interconnection Index, Latin American interconnection bandwidth is forecast to grow 62% per year through 2020, reaching 626Tbps of installed capacity.

In the same period, total global interconnection is seen growing 45% yearly to 5,000Tbps.